Copyright, Etc. and Trade Marks (Offences and Enforcement) Bill

Not amended in the Standing Committee, considered.

Order for Third Reading Read.

11.5 am

Dr. Vincent Cable (Twickenham):
I beg to move, That the Bill be now read the Third time.

It is a great privilege to introduce the Third Reading of the Bill. I shall be brief for two reasons. First, when the Bill passed through the House, there was no fundamental criticism of it and it did not attract amendments in Committee, so there is not a great deal to respond to. Secondly, I was up in the early hours of this morning not merely reminding myself of my own complicated legislation but trying to get to grips with pension annuities and Jewish divorce law, so my stamina for a long speech has been correspondingly reduced.

I take this opportunity to express appreciation to the various people who have helped the Bill to proceed thus far. I thank the Minister and her staff, who have been very supportive, and Government Back Benchers, especially the hon. Member for Ellesmere Port and Neston (Mr. Miller), who did much of the pioneering work on the Bill, building up acceptance for its necessity. I also thank Conservative Front and Back Benchers, who have been supportive and helpful during the Bill's passage.

I wish briefly to rehearse the reasons why the legislation is important. The essence of the problem is the importance that intellectual property now has in our economy, which is increasingly knowledge based rather than based on mass production processes. We all have thousands of constituents whose jobs depend on the success of knowledge-based industriesnot just the IT industry, although that is the most important, but the entertainment industry and manufacturing industries, which depend on copyright ideas for their profitability and success. Thus theft of intellectual property and copyrightpiratingdamages that new economy and we must be concerned about the economic consequences.

As discussions on the Bill have highlighted, this is an area where the interests of producers and consumers coincide. Consumers have often been exploited by copyright pirates and goods have been adulterated, sometimes in a dangerous way. The Bill would not only protect intellectual property for producers but is a consumer protection measure.

The Bill coincides with the interests of law and order because there is growing evidence from the criminal intelligence service and elsewhere that large-scale, organised crime has penetrated this area on a substantial scale, exploiting anomalies in the current legislation. It is important to get past the idea that this is a victimless crimeit clearly is notand the province of the lovable old rogues, the Del Boy characters, who sell things off the back of a lorry. It is a nasty, organised crime carried out by people associated with the drug industry, for example, who use copyright theft as a way of recycling their funds, and it is important to have appropriate criminal penalties.

The only other points that I need to make are specific and relate to interventions made on Second Reading and in Committee. Several hon. Members, including the hon.

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Member for Brent, North (Mr. Gardiner), asked about the relationship between the penalties for copyright theft, which is what the Bill is concerned with, and for comparable crimes such as those involving trade marks and fraud. The whole purpose of the Bill is to remove anomalies between those different aspects of the law. For entirely anomalous reasons, rather than by design, trade mark law is more punitive, with 10-year maximum sentences. Similarly, criminal fraud attracts the same level of sentence, but copyright theft has a much lower sentencing level with a maximum tariff of two years. There is evidence of criminals exploiting that anomaly, and the Bill seeks to close it.

In Committee, the hon. Member for Eastbourne (Mr. Waterson) sought to be assured that the Bill would not lead to a proliferation of new criminal offences and sentences, and I was able to reassure him that it would not. There is already a sentence for the crime of copyright theft. The Bill is concerned with aligning it with other comparable offences. It does not create new offences or sentences.

On Second Reading, the hon. Member for Croydon, South (Richard Ottaway) referred to the "Chanel" plant in his constituency and asked whether the Bill covered trade marks as well as copyright. Indeed, by its title it does. The provisions of the trademark law in relation to sentencing have been imported into the Bill to cover copyright; similarly, the copyright provisions on search warrants, for example, have been imported into the Bill to cover trade marks. The Bill reconciles different aspects of the law and makes them more consistent. It protects trade marks as well as copyright.

Finally, on Second Reading, the hon. Member for Rhondda (Mr. Bryant) drew attention to European copyright legislation. I understand that later this year the Government will introduce measures reflecting the copyright directive. I have been assured that there is no incompatibility between the different legislative routes. The EU copyright directive is primarily concerned with the information technology industry and the Bill relates primarily to large-scale reproduction through pirating. The two measures are fully consistent and complementary.

With those few words I ask the House to give the Bill a Third Reading. I thank hon. Members on both sides of the House who have helped its passage through the House.

11.12 am

Mr. Philip Hammond (Runnymede and Weybridge):
I congratulate the hon. Member for Twickenham (Dr. Cable), the hon. Member for Ellesmere Port and Neston (Mr. Miller), who was previously involved in this great enterprise, and all hon. Members on both sides of the House who have been involved in the passage of the Bill. It is a real achievement in improving the protection of intellectual property rights in the United Kingdom.

I do not want to sound churlish, but the only slight cloud hanging over the Bill is that it looks as though it should have been a Government Bill. It was clearly necessary to put right a deficiency in the body of law dealing with these matters. That said, the industries that depend on intellectual property and all hon. Members will be grateful to the hon. Member for Twickenham and everyone else involved with the Bill, especially as it is unusually complex and lengthy for a private Member's

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Bill. The hon. Gentleman deserves great credit for having piloted it through the House and mastered its complexities even if that occasionally involved getting up in the early hours of the morning.

The hon. Gentleman used a phrase that I had already jotted down: he said that intellectual property theft has too often been seen as a victimless crime. Which of us could honestly say that we have never photocopied a copyright map or recorded a copyright piece of music? However, over the past few years organised crime has moved into this area. Copyright theft is having a greater and more serious impact on our economy and is increasing all the time as our economy becomes more knowledge based and dependent on intellectual property and the rights that attach to it.

The development of new communications technologies, and certainly the realisation of their full potential, is critically dependent on effectively protecting the intellectual property in the content that they deliver. That is often achieved by technical means such as decoders. The Bill addresses the use of decoders as a contribution to protecting the content of the new converged communications systems. Protection will be enhanced through strengthening and simplifying enforcement procedures and that is the purpose of the Bill.

By focusing on this issue, Parliament is sending a clear message both to the industries that depend on intellectual property protectionthose industries make a substantial contribution to the UK economyand to those who would seek to abuse intellectual property rights. Theft of intellectual property is a serious issue: as the hon. Member for Twickenham said, it is both an economic issue and a consumer protection issue.

The Bill will help to ensure that those who seek unlawfully to benefit financially from the work, talent, creativity and investment of others are more readily, effectively and appropriately dealt with. It offers a significant measure of additional protection to our creative industriesa sector in which Britain is a world leader. It is essential that we protect this vital national asset base and this Bill does just that. The Opposition unreservedly welcome the Bill. Once again I congratulate the hon. Member for Twickenham on his handling of its passage through the House.

11.16 am

The Parliamentary Under-Secretary of State for Trade and Industry (Miss Melanie Johnson):
The discussion today has been knowledgeable and informative. I very much welcome the opportunity to discuss the Bill for the first time. Hon. Members will know that unfortunately I could not be present for the debates on its earlier stages and I appreciate the consideration that has been given to the important matters contained within it.

I am much heartened by the cross-party support extended to the Bill and congratulate the hon. Member for Twickenham (Dr. Cable) on having brought it this far. I join him in reminding the House of the earlier contributions by a number of hon. Members, including my hon. Friend the Member for Ellesmere Port and Neston (Mr. Miller) who was responsible for a similar private Member's Bill and who is present in the Chamber.

As has been evident from our discussion, the subject matter covered by copyright, which is the main area affected by this Bill, is wide ranging and touches many

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aspects of our daily lives. It is hard to think of many of life's pleasures and challenges that do not have some aspect of copyright bound up with them.

How we spend our leisure time is important to all of us. Art, books, music, theatre, newspapers, magazines, computer games, photography, television and films all involve copyright, although it does not normally include getting up in the early hours of the morning. The United Kingdom is active in all those areas, often as a world leader. As the hon. Gentlemen and my hon. Friend have said this morning, we have much in which to take pride. How much poorer our lives would be, how much greyer, less vibrant, without these areas of creativity.

What starts in the mind of an individuala single moment of creative sparkis fanned both by imagination and by sheer hard work. The first moments when a new creation is set before the world can be like lighting a candle: it is all too easy to snuff it out. If that flame is protectedshielded by the law of copyrightmiracles can happen. Imaginations can ignite and set the world on fire with a shared creative vision. Sparks in other minds flicker into life and the process continues. Copyright is the method by which creativity is rewarded and encouraged.

Copyright is not just concerned with individual creative genius. What may have started with a single creative thought is a matter of business, both big and small. Deals are done and contracts signed. Money changes hands. Making a living is important to all of us, whether we are a creator or an entrepreneur. We all like a return on our investment, after all, so whether we are talking about the original creator of the work or the organisation that may have put millions into the funding to make it all possible, there is a lot at stake.

However, it is all too easy for the unscrupulous to make a copy. To make many, many copies is, indeed, often very simple with such valuable property, and technology just keeps making it easier. We are all, I am sure, well aware of the ease with which perfect copies of copyright material can be made, and the opportunities provided by the internet for transmitting those copies all over the world.

I do not intend to dwell on copyright issues in the information society today. Hon. Members will know that last year a European directive on copyright and related rights in the information society was adopted, and we are now, as the hon. Member for Twickenham said, in the process of implementing that in the United Kingdom. Although our copyright law already provides a high level of protection in the online environment, the regulations that we will introduce in due course to implement the directive will make further improvements in protection aimed specifically at that environment.

The Bill will tighten the provisions that apply when people are involved in making for sale and dealing in physical copies of copyright material in the knowledge that they do not have a licence from the copyright owners. In the main, this will involve illegal copies on compact discs or digital video discs or videos, and the copyright material will often be software: computer games and business software, music and films. Offences already exist that apply to such illegal activity, and they are not changed by the Bill, which is simply directed at the consequences for offenders.

It is important to remember that, with the making of counterfeit and fake copies, there is no recompense for the copyright owner. Nothing is given back to those who

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made it all possible. There is no reward for the creator of the copyright material and nothing for the financial backer. If future creativity is to be encouraged, we must make it possible to deal appropriately with people who knowingly take part in the illegal behaviour that is caught by the offences in copyright law.

The enforcement agencies that try to stop counterfeiting and piracy have often turned to trade mark law in preference to copyright law in taking action in this area. In many instances, after all, trade marks have been infringed along with the copyright, but to consider only the trade mark infringement has somehow made copyright infringement appear a lesser offence when it is not. In many instances, the copyright infringement can lead to just as much damage to right holders as the trade mark infringement, and in both cases consumers and society in general are also victims. The theftfor it is theftcan be a serious crime, whether it be of copyright alone, copyright and trade marks, or just trade marks.

Until now, copyright theft has been considered the lesser theft, attracting lower maximum penalties, even though it can cause equal harm. The Bill is designed once and for all to give copyright theft equivalent standing to that of trade mark theft by copying into copyright law the better provisions on maximum penalties and forfeiture of infringing goods that already exist in trade mark law.

Copyright law is not in all ways less effective than trade mark law, however. The provisions in copyright law on police search warrants are useful, and the Bill seeks to extend them more widely, including into the trade mark area. Rights in trade marks can be just as valuable as copyright. They allow a reputation that may have been built up over many years to be protected. Trade marks are used to give consumers reassurance that the products that they buy under a particular brand name will have the usual quality that they expect from a particular manufacturer.

Illegal use of trade marks on poor or shoddy, or even malfunctioning or dangerous, goods undermines the trust that consumers have when they see that trade mark. That can have extremely serious consequences for the reputation that has been so carefully nurtured and developed over many years, as the hon. Member for Twickenham said.

The Bill is a package of harmonising or rationalising measures that copy the best provisions that already exist in one area into the others, so that both copyright and trade mark crime can be dealt with more efficiently, effectively and fairly. Copyright and trade mark rights are, of course, both forms of intellectual property. The Bill also covers other areas of intellectual property related to copyright, such as the rights granted to performers over recordings of their performances.

By harmonising the law in the areas that I have mentioned, the Bill makes it clear that copyright offences are not less than trade mark offences, and vice versa. Theft is theft. If people steal the intellectual property of others, be it by trade mark or copyright infringement, or in any of the areas related to copyright, they must bear in mind the consequences.

Before considering the detail of the Bill, I would like to return to the subject of harm and who is affected by intellectual property or IP crime. I stressed those issues last December when I launched the Crimestoppers

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national anti-counterfeiting campaign in London. That event was the culmination of collaboration between many interests, including right holders, enforcement agencies, and of course the charity known as the Crimestoppers Trust. It was just the start of a long-term campaign to raise people's awareness of the serious consequences of counterfeiting.

All of us here today are well aware that IP crime threatens not only our creative and innovative industries but consumers, jobs and society in general, but public understanding of the issues is very low. Raising awareness will need to be undertaken over a long and protracted time scale, but acting under the well-respected and well-known Crimestoppers logo does, I believe, provide a valuable way forward.

I said at the London launch on 3 December that it was just the start of the campaign. I was immensely pleased by the high level of media interest in that launch event, but the messages will need repeating again and again. Indeed, the first regional event to reinforce that campaign has now taken place. My right hon. Friend the Secretary of State for Trade and Industry was present at an event in Leicester in February that highlighted in particular the damage caused by counterfeiting to the legitimate clothing industry in that area, while also reinforcing the message that this is indeed a national and international problem, affecting many diverse areas. We hope to be able to support more events in the future, and that the media will continue to help us highlight the messages that we need to get across.

Of course, linking up with Crimestoppers has a dual purpose. As well as raising public awareness, the campaign is aimed at encouraging people to report the crime to the free, confidential Crimestoppers phone number. Many people will know where there are instances of IP crime. As both hon. Gentlemen said, many people are tempted to buy fake goods because they may appear to be bargains, but people may also know who is behind this illegal activity. Wherever people come across this crime, we hope that they will give information to the enforcement agencies or right holders or, if they prefer, to the Crimestoppers number, from where it will be passed on to the right people to deal with it.

We know that public perceptions of counterfeiting often derive from characters such as Del Boy, or a lovable rogue selling cheap fakes from a battered suitcase. Many people know that selling fakes is illegal and that the manufacturers of the genuine goods may be losing out, but the public often have more sympathy for the guy selling the fakes in the rain than for the business interests that may be damaged. In order to understand why working with Crimestoppers in this area is so important, we need to understand why those public perceptions are wrong and why we need to change them through the Bill.

Counterfeiting or IP crime involves stealing. It is the theft of property, intellectual property, and is no less serious than the theft of physical property. Indeed, it may even be more serious. By stealing just one brand name, as the hon. Member for Twickenham said, or just one piece of copyright material such as a computer game, the criminal can make illegally many thousands or even millions of goods incorporating that material. The counterfeiter has spent no money creating and developing new products. The counterfeiter has not invested in building up a reputation for good-quality goods, backed

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up by a reliable after-sales service. The counterfeiter fraudulently copies IP, and sometimes even has the cheek to charge the same price as that of the genuine article.

However, few fakes match the quality of the authentic goods, and we know that consumers can sometimes become extremely disappointed as a result. The lovable rogue will not be around to give a refund; fakes do not come with guarantees or an after-sales service.

Counterfeit and pirate goods that do not work properly or that come apart after a few uses at least lead to no more damage to the consumer beyond a hole in their purse. There are fakes, though, that can pose serious hazards to consumers. All too often they can be goods that are attractive to children. The counterfeiters are quick to profit, paying no regard to safety standards, so counterfeit toys with parts that come off too easily, leaving sharp ends, and children's nightwear that has the latest attractive logos but is highly flammable, have been found. There are also examples of damaging goods among products for which copyright is more important, such as computer software containing viruses that damage the computer. Anything else that the counterfeiters can copy will be available for those who want to take the risk.

Linking Crimestoppers and counterfeiting involves much more than concerns about consumer safety, though. As the Bill recognises, counterfeiting is a crime, and evidence is growing that organised crime groups are behind many of the characters at markets, car boot sales and on street corners who are selling fakes. Sometimes the web of criminal activity stretches over many countries. At other times, organised crime groups based only in the United Kingdom are involved.

The links between IP theft and other serious crimes are becoming more transparent. As the director of the Crimestoppers Trust said at the London launch of the anti-counterfeiting campaign, the guy selling the fakes may be only two handshakes away from someone like bin Laden. That is not just a fairytale idea; we have evidence that it may be close to the truth.

Last year's threat assessment by the National Criminal Intelligence Service highlighted two links with serious organised crimewith drug trafficking and immigration crime. I shall cite some quotations from that threat assessment:

"Counterfeiting is enormously profitable, and organised criminals are heavily involved in the production, the buying and importing and the distribution of all types of counterfeited products . . . The profits from IP theft can help organised crime groups to become more established and to fund other various criminal activities."

NCIS also said:

"Over two thirds of the organised crime groups reported to be involved in intellectual property theft were seen also to be involved in drug trafficking. Drug and intellectual property theft are very different areas of crime, except that both involve smuggling and selling, and the levels of risk attached are also very different. The links are not fully understood, but there are large profits to be made from counterfeit goods, and this may be the simple explanation."

I am sure that those quotations leave hon. Members in no doubt that what we are talking about, and what the Bill is about, is a serious area of crime.

Counterfeiting also leads to job losses and to the creation of fewer jobsnot just jobs in big business and in other countries, but those on the high street and in the UK. Big retailers may be able to recoup some of their losses owing to counterfeiting, probably by adding

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something to the cost of the genuine articles, but if counterfeiters move in with their goods, small high street shops may close down, putting local people out of a job. Intellectual property crime is therefore a problem in all our constituencies.

The consequences of IP crime are therefore far-reaching, and the publicity for the Crimestoppers campaign highlights some of those messages. We do not expect public perceptions to change overnight. We know from experience that raising public awareness will be a long and slow haul. However, because of the serious impact of IP theft, we know that it is important that the effort is made and that making it under the well-respected Crimestoppers logo is an excellent way forward.

Crimestoppers of course plays a role in gathering intelligence to fight crime generally. Last year, the Home Office published an independent evaluation of the work of the trust, which recognises the valuable contribution to crime reduction that the charity makes. The anonymous freephone number received more than 500,000 calls in 2000, and 17 per cent. of the calls on which action was taken resulted in an arrest, a charge or a caution. I fully agree with the recent comment of my right hon. Friend the Minister for Policing, Crime Reduction and Community Safety that

"Crimestoppers is a unique and effective route to gathering vital intelligence for the police and other law enforcement agencies."

I am particularly pleased that the launch of the Crimestoppers anti-counterfeiting campaign and the rolling programme of events around the country over the coming months have been made possible by the sponsorship of some industries that are affected by IP theft. We should encourage other industries to support the campaign as it develops. Crimestoppers has a history of voluntary and business interests working in partnership. The anti-counterfeiting campaign is a joint venture fitting that pattern entirely appropriately.